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This is part of a series called “How We Got Here.” Part 1, Part 2.
2010
After the happy-go-lucky-fun-times of 2008/2009, I’m finally feeling relaxed and getting back into the rhythm of things.
Work is going so well, I decide to acquire a comb! Because unlike when I worked for “The Gulag”, I actually have time to shower, brush my teeth, and comb my hair. Finally, I’m starting to look and smell like me, instead of a pile of garbage disguised to look like a human being.
My new boss, Scott, is great. He leaves Lindor chocolates for us on his desk, takes us out for team lunches, even invites us to his house for summer BBQ’s. And unlike my old boss, he actually calls me by my real name, instead of “What’sHerFace”.
One day, I come home to find that Wanderer has scattered rose petals on the floor, placed vanilla-scented candles on every surface, and even set up a massage table in the middle of our living room.
After giving me a nice, long, aromatherapy massage, he gets down on one knee, and says: ‘this is what your life will be like from now on. Marry me?”
I blink. Once, twice. Three times. I’m having trouble seeing. What is this strange, unfamiliar wet stuff in my eyes?
But just as I’m about to answer “Yes! Yes! A thousand times yes!” our 70-year-old half-naked landlord bursts into the room in his tighty-whities yelling “HEY! NO CANDLES IN THE HOUSE!”
And that’s the story of how we got engaged…
The next week, we start planning for a big, elaborate wedding. But while we’re struggling to choose between Chiavari or Bentwood chairs for the reception (on the form, I write in “who gives a shit” but that just makes the wedding planner mad), I throw my hands up, and decide fuck it, we’re eloping. So instead we go to Aruba and choose a simple beachside wedding package, consisting of Wanderer, me, and the giant pile of money we’re NOT going to blow on a pointlessly extravagant wedding. To keep my in-laws from disowning us, we agree to let my mother-in-law invite whomever she wants to the reception back home.
On our big day, our perpetually frazzled wedding planner gets all the details wrong…from the flowers (we asked for lilies, we got hydrangeas), to the color scheme (we asked for red, we get gray), to even the cake (carrot cake?!? What kind of monster are you?).
But as I stare into Wanderer’s big doe-like eyes and fuzzy caterpillar brows, I think “Who cares”? I’m marrying my best friend, and we are going build one kickass empire.
We are married. On a beach, at sunset, overlooking the Caribbean. I’ve married the boy who’s been my lab partner and BFF since 2nd year university. This turns out to be my best life decision ever.
And now that we’re married and saving up for a house, I actually start to dig into our expenses.
“Hey, do you know we’re spending $500 a month JUST on beer?” I ask Wanderer.
“But beer is delicious! We can’t just NOT drink beer. That would be insane.”
“Yeah, but you know they have beer in STORES right? Why can’t we buy beer and drink it at home?”
Wanderer looks at me, confused for a second. “I…don’t…know.”
Around here we also just woke up and realized that the ritual of paying a cover charge to get groped by random strangers who are 80% Axe body spray, also known as “clubbing” is incredibly stupid. So our food budget drops effortlessly by $500/month ($300 saved by buying beer at the supermarket rather than bars, $200 saved by no longer going clubbing) . YEEHA!
Spending:
| Category | Cost / Month | Comments |
|---|---|---|
| Rent | $800 | |
| Food/entertainment | $1700 | |
| Bus pass/utilities/misc | $300 | |
| Vacation | $154.17 | |
| Wedding/Honeymoon | $833.33 | $10,000 total for that year which includes: Aruba wedding package: $1000, Aruba honeymoon vacation package: $7000, Wedding dresses: $100+$300 (bought from an outlet),Wanderer’s suit: $400,Hair and makeup, photographer, misc: $1200,Reception: $0 (Actual cost $10,000 but it was covered by cash gifts from guests) |
| Savings | $8329 |
Miraculously, I managed to somehow not fuck up at work, and get another promotion. At the end of the year, this is what our balance sheet looked like.
| Category | Amount | Comments |
|---|---|---|
| Combined income (after tax) | $145,400 | |
| Total Spend | $45,450 | |
| Savings | $99,950 | |
| Savings Rate | 69% | |
| Total Net Worth | $380,250 |
2011
Now that we’re married, it’s time to act like real adults and start shopping for a house.
We look around the neighbourhood and find one that’s decent. It’s a semi with no parking, low ceilings, and an unfinished basement, but I do like the kickass backyard and balcony.
We ask for the price and the listing agent tells us “$750,000”.
“WHAT? But it doesn’t even have parking!”
“If you don’t want it, I have eight other buyers lined up.”
And it’s not just this house. Let me tell you a story about “Devil House”.
You see, Devil House, is this dilapidated, two story house we see every day on our way to work. To say that it’s a fixer upper would be the biggest understatement ever. Why? Because DH wasn’t just falling over, it was inhabited by a man who would have made Charles Manson look normal. One time we walked by and saw the word UFO smeared over all his windows with what we could only hope was red paint. Another time he put up signs all over his yard ranting about the government trying to steal his eyes. And one time we walked by and saw him digging a bunch of six foot-deep holes all over his front and back yard. (This is NOT a joke. This actually happened.)
So you can imagine our shock, when, one day, we see a sign on the door that says “FOR SALE”.
“Who in their right mind would buy this house?” I ask Wanderer, incredulous.
“I bet some idiot’s going to buy it for $500k”
I burst out laughing. “No one’s THAT dumb.”
One week later, SOLD. $500k.
“WHAT?!?”
And to prove my point, a flipper moves in, slaps some dry wall and hardwood floors on it, and sells it for $800K two months later.
The floors were uneven. There was no parking. And a cursory home inspection would’ve revealed that the basement was a portal to Hell. But of course, no one bothered with an inspection because they had to drop all conditions to participate in the ensuing bidding war.
To this day, we have no idea how many bodies the new owners found under the floorboards.
Oh, and speaking of dead bodies I see every day, my team narrowly escapes the guillotine during a massive re-org, and we move to a new department.
Things are eerily quiet when we walk into the new office. No one is laughing. No one is smiling.
People find it strange that we joke during meetings. They find it strange our boss talks to us in human language, instead with barks and growls. They start whispering amongst each other whenever we are around. I suspect this is NOT a good sign.
Right around now we decide to take a break from all the fruitless, idiotic house shopping, and go on a vacation to Las Vegas. I have a blast. Literally.
When I come back from our trip, I learn that I have a new Director. She’s constantly mad, and with her long shaggy hair and sizable canines, she kind of looks like a dog. So I call her MadDog. And my boss Scott has, somehow in the course of 2 weeks, gained a whole bunch of gray streaks in his hair. The reason why is obvious, as he is being constantly barked at by MadDog.
One day, he announces our work is quadrupling. Orders are coming from the top that our performance, which had racked up awards in our old department, was now somehow “unacceptable”, and we now needed to submit weekly reports detailing why we shouldn’t be immediately fired and replaced.
And just when I was starting to like this place…
Spending:
| Category | Cost / Month | Comments |
|---|---|---|
| Rent | $800 | |
| Food/entertainment | $1700 | |
| Bus pass/utilities/misc | $300 | |
| Vacation | $583.33 | Vegas, Cruise, Orlando for $7000 |
| Savings | $10575 |
And at the end of the year…
| Category | Amount | Comments |
|---|---|---|
| Combined income (after tax) | $167,500 | Wanderer gets a second promotion. Work is getting hellish for me, with lots of overtime, but at least our salary goes up. |
| Total Spend | $40,600 | |
| Savings | $126,900 | |
| Savings Rate | 76% | |
| Total Net Worth | $507,150 |
At this point, our cash in the bank has peaked above half a million bucks, and we start saying, “Holy crap, this is kind of a lot of money.” The plan was always to buy a house, considering it’s the “grownup” thing to do, but… considering how my work is quickly morphing into “Gulag 2.0” and the housing market is just getting more and more idiotic, we start searching for better options.
And one fateful morning while browsing finance blogs, we idly scroll by one that catches our eye.
“Hmm…” Wanderer says. “The Greater Fool…”
To read the next post in the series, click here.
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You found Morpheus the breaded one !!
he changed my life too… 🙂
He’s pretty great, but I wish he would stop making us kung-fu fight at our portfolio review meetings.
just going to get started with the bearded one..read all his blogs..maybe not heeded all his advice, but i think its time I do.
Tell him FIRECracker says “hi”. You’ll get a free scratch behind the ears 🙂
Is there a part 4 & maybe 5 coming ?
The part where the GF blog dogs get to know how much of your nest-egg-for-life is from two talented STEM people saving hard and living carefully versus the gains you got from investing in a “Garth Turner Diversified Portfolio”.
Thanks in advance – parts 1 to 3 have been really interesting and also a fun read.
Yup. Part 4 (The Bearded One) is where we breakdown our gains from the portfolio. We’re still writing it and it’ll be posted by the end of this week. Glad you enjoyed parts 1 to 3!
Don’t forget to include what Garth brings to the table instead of self directed.
OKAY OKAY!!! *grumble grumble* *backseat bloggers* *grumble grumble*
Firecracker, do you not buy clothes? Not a criticism. Just curious. I can’t believe how disciplined you two are. Kudos!
Hey, it took me 4 years to pony up the cash to buy a comb! Clothes were out of the question!
No, but seriously, I didn’t buy a lot of clothes. I bought a lot of clothes in university, and then once I started working, I barely had time to breathe never mind shop. So I pretty much wore what I had.
Curious if either of you had a life insurance policy during this time that was not through work?
Nope. The portfolio is basically our life insurance.
nice!
Have your salary chip away by insurance company or put your money to work with a plan
Health is important and that is what i’m grateful for. Society isn’t kind to cripples.
Firecracker,
Thanks for sharing. Enjoyed this series of blog posts a lot. You guys managed to have a keep a very high savings rate while at the same time you were able to have a nice travel budget.
I would be very interested to know how you project your future income now that you are retired. I understand that you plan to have your expenses paid for by what the portfolio throws off. Would like to have some additional details on your assumptions for portfolio return, inflation, expense increase or decrease over time and what contribution you have modelled for your “active” retirement income (ie…non-passive income).
Thanks again!
Thanks! We will be posting a breakdown of our costs after retirement (it’s been 1 year) and our projections for inflation, childcare costs, etc once the series is complete. Thanks for the feedback!
How did you like Aruba? I hear its very windy there.
We loved it. It’s beautiful! (we went in Sept and it wasn’t windy at all) We’re still looking for an excuse to go back. Someone host a writing conference there, damn it!
Some scary stuff from those tin-foil-hatters the Bearded One calls “that Zero Guy” (well, actually the OECD, but with a fun sarcastic spin courtesy of ZH)…
http://www.zerohedge.com/news/2016-06-01/oecd-warns-disorderly-housing-market-correction-canada
Cheers.
To quote “The Bearded One”: “This blog failed. We’re all doomed! DOOOOOMED!!!”
Congratulations on your success and thank you for sharing your experiences. It’s an entertaining and informative read.
Thanks! Glad the story doesn’t suck 🙂
Thanks for sharing your story FireCracker, it’s very insightful for a 27 year old like myself.
However, I can’t help but feel your success is almost entirely down to two things, which in turn snowballed everything else. You guys were earning almost $200k a year just a few short years after graduation. Combine this with the typical student mentality of living frugally (which you discovered a little later), you were bound to have an insane level of savings every year. I haven’t read this blog enough to know where you are living, but I can bet a lot it’s not in Vancouver or Toronto. $800 rent is astoundingly low. To be frank, if you weren’t millionaires in your 30’s, you must have done something astonishingly wrong. Even if you bought property and had children, you would likely still be a millionaire before 40.
We earn a combined salary of around $100k (pre tax) and live in Vancouver where our rent is $1,800 for a small one bed apartment. Our saving rate is around 30% and sure, with a lot of frugality we could perhaps raise this to 40%, but certainly nothing near the 60-80% figures you can hit due to huge salary and low living costs (your living costs are much lower than ours and salary is double)
Your smart investments certainly helped you reach retirement early, but it’s largely down to your massive salaries, zero debt and minimal living expenses. Sadly this isn’t the reality to most people. Most people don’t earn that kind of money until the end of their career (if ever), have high student debts and many live in expensive cities where cost of living is much higher than what yours is. So, following your advice is nigh on impossible. Certainly people can retire earlier, but not even close to 31.
Following your 4% rule (including the reduction in expenses at retirement and money earned after retirement) we could probably retire when we are close to 50. That would likely be if we didn’t purchase a property, and didn’t have children. Certainly that would be nice to achieve, but I feel most people start falling for house lust and starting a family in their mid 30s at the latest, and all plans for early retirement take a back seat.
When we were 27 (2007) we earned 125k, so you’re not that far off at the same age.
And we actually did live in Toronto. We just didn’t go buy a ridiculously expensive house like everyone else or rent a condo in the downtown core for $1800. Many of our friends did.
“To be frank, if you weren’t millionaires in your 30’s, you must have done something astonishingly wrong.”
YES! I absolutely agree with you. Yet most people out there who earn in our range are counting credit card debt in their 30’s. Something is wrong with that.
What did you get for $800 p/mth in rent in Toronto? That’s the only part I don’t get, it seems incredibly low.
Top floor of a townhouse in Greek town. It was older place and 30mins subway from downtown. Super good deal because we got along with the landlord and helped him fix things around the house.
I gotta say, I wish I bought more property in 2011-2012. But 2012 was the year I engineered my layoff to get a severance package after 11 years of work to break free. Property prices are up about 60% since 2012 in San Francisco.
BTW, why do folks think having a mortgage chains them to not being able to travel etc? If your housing expenses are the same buying or renting, what’s the difference?
Sam
I agree that in theory if rent vs buy costs are the same, it shouldn’t matter. However, in my experience a house causes people to go “house-crazy,” in which they then go all shopaholic and fill up their house with crap they don’t need, unwittingly putting their finances teetering on the edge of disaster, then sit around worrying that a job loss or a burst pipe will leave them destitute.
You’re actually one of the few people I’ve seen who have managed to buy up so many properties in a high-priced city without putting your finances into the crapper, but that’s probably because you have a background in Wall Street. Lots of people THINK they can do what you do, but actually don’t know what the fuck they’re doing.
Yeah, people get REALLY emotional when buying a house. And it is true, that the price for carrying a house is generally more the first 2-3 years in the major cities. But over time, largely thanks to inflation and relatively fixed costs, it becomes cheaper. And then give it 10 years, and it becomes much cheaper. Inflation is crazy powerful.
Folks say “wow, I can’t believe your property is up 85% since 2003.” But, the compound growth rate was only about 4.8% a year. Inflation is a beast if you can ride it.
I downsized in 2014 and happier for it. Feels good to not have so much wasted space.
S
Downsizing seems to be very difficult for most people. It’s easy to go up in lifestyle, insanely hard to go down (to paraphrase Chris Rock). So good to hear that you’re happier for it.
I think become FI wasn’t as difficult for us mainly because we didn’t do the whole “lifestyle inflation” and “keeping up with the Joneses” thing. The only area we felt was worth blowing money on was travel. So we did that. Everything else didn’t matter.
Seems like it’s easier to fall into that trap with a house (even if you do make gains) because people feel COMPELLED to fill it with stuff.
Its all relative to your situation, isn’t it. Great Blog, I am happy for you, now go and have a couple of kids… don’t wait too long.
Rent in Victoria is attrocious… so we bought. (2012) a 3BDR, mortgage payment is 1800/mth, 1200 of that is intereest, 600 is principal. Now even when we add taxes (2500) and repairs etc.
We are still ahead, as renting this house in Victoria would be $2200/mth. Renting an apartment in Victoria is close to 1100/mth.
We rented for years and were able to save, but the situation changed a few years ago.
cheers
D.
Curious (and sorry if you’ve already answered this – I skimmed): Where did you park your savings each month/year as you were building toward $500K?
How did you manage to pay off your debts from University? or did you do that as you saved $?
We strategically picked an engineering program that had co-op. Which means we could work while going to school. That gave us experience in the job market AND allowed us to pay our debts. This is why we highly recommend degrees that have high ROI and a internship/co-op program of some sort. That way you get experience and no debt when you graduate.
FireCracker I’ve been binge reading your blog non-stop for two days straight, and I need to ask you, I’ve been doing the same thing as you’ve been doing minus the Index Investing (just regular RRSP Mutual funds) and we only have one source of income.
Question is how do you guys make so much money (i.e. income)? We live in Canada (taxes are sorta high) and I took your combined income and divided it by two (single income) and I still don’t get near as close to those gains. I’m also an engineer. We live on the cheap. Can you help me out a little?
BTW much props to fighting the power!
Thumbs up!!!?
You’re are great, guys!!! Just love your style! Wonderful blog and fresh new ideas full of optimism and positive energy!!! Please, keep going! Also, let me know if by any chance you’ll be visiting Yellowknife. I’m buying beer (I know you like it, moreover it FREE 😉 )
Vladimir K.
Yellowknife, YK
Thanks, Valdimir! How can we possibly say no to booze? 🙂 Will definitely take you up on that offer if we’re ever in YK.
Wow your savings rate is insane! So inspiring! Also, mad dog sounds like a jerk. I don’t know how people like that survive in the wake of their insanity.
It’s a vicious cycle. Some insane person up top has these ideas for “efficiency”, then passes it down to their subordinate, who then passed it to Mad Dog and it eventually trickles it’s way down to us. Shit rolls downhill as they say. Glad I don’t have to put up with that anymore.
WOW! About that saving rate, I think its also FAIR to say you guys were outliers in a sense of your high income. Doing the math at a tax rate of around 30% you were making combined gross income of $235,000 at least. I bring that up because that income range is not realistic for most of us and I think myself included can think “wow, this is incredible to see Millennial Revolution crush life and accumulate massive amounts of money quickly”, but I don’t make anything near that. I just don’t know how vocal you guys are about the large incomes you made and how that helped you accelerate the cash accumulation. I have learned from you guys about wisdom in not buying a home and for that thank you. I’m only commenting on the high incomes you made that afforded you this incredible saving rates.
Your numbers don’t add up to the total net worth. Did you include the net dividends in the savings calculations? For example, in 2009,
Combined income (after tax) $167,500
Total Spend $40,600
Savings $126,900
Savings Rate 76%
Total Net Worth $507,150
How does $167,500 + $126,900 = $507,150??! You’re leaving things out. Basic math.
The total net worth is cumulative. For 2011, you need to add the money we’ve accumulated from 2006 to 2010.
So it’s not $167,500 + $126,900, it’s $380,250 + $126,900 = $507,150.
I have no idea why you would add the combined income to the savings rate to get net worth. Net worth is savings + investment gains + net worth accumulated from previous year.(at this point, we didn’t have investment gains because we didn’t re-invest until 2012). Also, the numbers you mention above is for 2011, not 2009.
Where are you getting rentals at 800$!! This market is crazy!